UNITED STATES OF AMERICA
BEFORE THE
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.

DEPARTMENT OF DEFENSE
DEPENDENTS SCHOOLS, PACIFIC REGION
Agency

and

OVERSEAS EDUCATION ASSOCIATION
PACIFIC REGION
Union

Case Nos. 0-AR-1343
0-AR-1445
(30 FLRA 1206)

ORDER GRANTING MOTION FOR
RECONSIDERATION

I. Statement of the Case

This matter is before the Authority on a motion filed by
the Union seeking reconsideration of that part of the Authority's decision
which concerns the award of attorney fees to Ann Hurst, a Union-salaried
attorney. The decision modified an award of attorney fees payable to Ms. Hurst.
We determined that the method for calculating the amount of fees payable
to Ms. Hurst was the cost-plus formula, rather than the prevailing market rate
the Arbitrator had used.

Section 2429.17 of the Authority's Rules and Regulations
permits a party that can establish extraordinary circumstances to request
reconsideration of a decision. For the reasons discussed below, we grant the
motion for reconsideration.

II. Background

In our decision in 30 FLRA 1206, we found that the
Arbitrator had used the "lodestar" method for determining the amount of fees to
be awarded to Ms. Hurst, an attorney employed by the Union, and to Richard
Hirn, an attorney in private practice, both of whom had represented the
grievants involved in the case. The "lodestar" method involves a computation of
an attorney's customary billing rate multiplied by the number of hours
reasonably devoted to a case with appropriate adjustments for any special
factors. In his decision, the Arbitrator had carefully scrutinized the requests
made by both Ms. Hurst and Mr. Hirn and had awarded specific dollar amounts to
each.

We found that the Arbitrator had properly awarded
attorney fees to Mr. Hirn based on the "lodestar" method. However, as to Ms.
Hurst, we found that since she is an attorney employed by the Union, attorney
fees should have been based on the actual costs of services rendered--that is,
use of the cost-plus method. Accordingly, we modified the Arbitrator's award
and directed that the Agency reimburse the Union, as the employer of Ms. Hurst,
in accordance with the cost-plus formula.

III. Union's Motion

The Union claims that the Authority erred by reducing the
attorney fees payable to Ms. Hurst from the prevailing market rate (the
"lodestar" method) to the cost-plus formula. In support of its position, the
Union relies on the decisions of the Court of Appeals for the District of
Columbia Circuit in National Treasury Employees Union v.Department
of Treasury, 656 F.2d 848 (D.C. Cir. 1981) (NTEU); the Federal
Circuit in Devine v. National TreasuryEmployees Union, 805 F.2d
384 (Fed. Cir. 1986) (Devine), petition for cert. denied sub nom.NTEU v. Horner, 108 S. Ct. 67 (1987); and the Ninth Circuit in Curran
v. Department of Treasury, 805 F.2d 1406 (9th Cir. 1986) for the
proposition that union-employed attorneys may receive awards of fees at the
prevailing market rate rather than at the cost-plus rate if the attorneys are
not required to compensate the union for any fees that are awarded in excess of
the union's costs.

The Union now argues that since Ms. Hurst is not
obligated to return to the Union fees awarded to her which exceed the Union's
actual costs, she is entitled to an award of fees based on the prevailing rate.
Therefore, the Union requests that the full fee awarded to Ms. Hurst by the
Arbitrator be reinstated.

IV. Analysis and Conclusions

On reconsideration, we find that the Union's position has
merit. Accordingly, we shall sustain the Arbitrator's original award of
attorney fees to Ms. Hurst.

In the NTEU and Devine cases cited by the
Union, the courts recognized that attorneys employed by unions may be awarded
market or prevailing rates if the fees are awarded directly to the attorneys.
As the court stated in NTEU:

Reasonableness, in terms of market value of the services
rendered, is the sole limit on fee awards to organizationally-hired lawyers
when the fees are to be paid to the lawyers alone. (Footnotes
omitted.)

656 F.2d 852-53.

In order for an award of fees at the prevailing rate to be
made to a union-salaried attorney, the attorney must present evidence that the
fee is to be awarded directly to the attorney. Furthermore, the attorney must
demonstrate that the terms of his or her employment do not require that the
union be reimbursed from such a fee award for more than the actual costs the
union incurred in providing the legal representation. If, on the other hand,
the attorney is obligated by the terms of his or her employment with the union
to turn over the entire fee award to the union, then the fee award may not
exceed the actual costs the union incurred in providing legal
representation.

The Union has submitted an affidavit from Ms. Hurst. That
affidavit, which was also provided to the Arbitrator, states that Ms. Hurst is
not obligated by virtue of her employment contract or relationship with the
Union to return to the Union any attorney fees awarded to her which exceed her
hourly salary. The Agency does not question or contradict Ms. Hurst's
assertion. In fact, the Agency did not except to the amount of attorney fees
awarded by the Arbitrator and as a result, the affidavit was not a part of the
r